TUPELO, Miss., Jan. 22 /PRNewswire-FirstCall/ -- BancorpSouth, Inc. (NYSE: BXS) today announced financial results for the fourth quarter and year ended December 31, 2008. Aubrey Patterson, Chairman and Chief Executive Officer of BancorpSouth, stated, "For the fourth quarter, BancorpSouth produced solid financial results in an unusually challenging economic environment. Net income for the fourth quarter was $16.8 million, or $0.20 per diluted share, including significant fair value adjustments driven by market conditions. These non-cash charges related to the valuations of our mortgage servicing asset and certain investment securities and reduced net income by $15.3 million, or $0.18 per diluted share. While many challenges lie ahead, BancorpSouth entered 2009 well positioned with a strong capital structure, ample liquidity, a quality loan portfolio, diversified noninterest revenue streams and continuing profitability." Highlights of the fourth quarter include: -- Solid profitability for the fourth quarter of 2008, with net income of $16.8 million, or $0.20 per diluted share. -- Expansion of the net interest margin to 3.74 percent. -- A 5.6 percent increase in loans and leases compared with the end of 2007, which contributed to the 1.5 percent growth in net interest revenue. -- Strong credit quality with non-performing loans of 0.64 percent of loans and leases and annualized net charge-offs of 0.57 percent of average loans and leases. -- Double-digit growth in insurance commissions from the comparable quarter of 2007. -- Further improvement of the ratio of equity to assets to 9.20 percent at the end of 2008 from 9.07 percent at the end of 2007. -- Election not to participate in the U.S. Treasury's Capital Purchase Program under the Troubled Asset Relief Program (TARP). Summary Results BancorpSouth's net income for the fourth quarter of 2008 was $16.8 million, or $0.20 per diluted share, compared with $32.2 million, or $0.39 per diluted share, for the fourth quarter of 2007. Net income for the year ended December 31, 2008 was $120.4 million, or $1.45 per diluted share, compared with $137.9 million, or $1.69 per diluted share, for 2007. Patterson added, "We are encouraged by BancorpSouth's operating and financial performance for the fourth quarter of 2008 given the exceptional turmoil in the financial services industry, capital markets and the national economy. "During 2008, we continued to execute what has proven over numerous economic cycles to be a strong fundamental business plan. While our growth during 2008 moderated by design, careful expansion into growing, familiar and geographically diversified markets supported our ability to expand our loan portfolio and secure low cost deposits. Credit quality remained sound, with losses and non-performing assets at manageable levels, and our asset/liability management produced a stable net interest margin. Our noninterest revenue products and services have strengthened our market presence and significantly mitigated the impact of interest rate volatility in our traditional banking business. "These solid operating results were partially offset in the fourth quarter by the decline in the fair value of BancorpSouth's mortgage servicing asset. This decline in value resulted in an after-tax charge of $10.0 million, or $0.12 per diluted share. Current accounting standards also required us to recognize in the fourth quarter a charge as a result of the other than temporary impairment of certain investment securities even though they continue to perform and cash flow. The amount of this after-tax write down was $5.3 million, or $0.06 per diluted share." Net Interest Revenue Net interest revenue increased 1.5 percent to $111.3 million for the fourth quarter of 2008 from $109.7 million for the fourth quarter of 2007 and 1.6 percent from $109.6 million for the third quarter of 2008. The fully taxable equivalent net interest margin increased to 3.74 percent from 3.72 percent for the fourth quarter of 2007 and 3.67 percent for the third quarter of 2008. "For the fourth quarter, we again generated a relatively high and stable level of net interest margin through our asset/liability management strategies," said Patterson. "These strategies are designed to increase interest revenue and decrease interest expense by funding loan growth with the proceeds of maturing lower yielding investment securities, short-term borrowings from the Federal Home Loan Bank (FHLB) and growth in demand deposits. Because of the decline in interest rates during the fourth quarter of 2008, our comparable quarter interest expense on these short-term borrowings declined significantly. In addition, demand deposits increased by 14.0 percent at year-end 2008 compared with the end of 2007, while higher cost time deposits decreased by 20.4 percent. "Our asset/liability management strategies are also focused on maintaining ample sources of liquidity. We continue to have substantial capacity for further borrowings with the FHLB and can readily expand public fund time deposits through more aggressive pricing." Deposit and Loan Activity Total assets at December 31, 2008 increased 2.2 percent to $13.5 billion from $13.2 billion at December 31, 2007. Total deposits declined 3.5 percent to $9.7 billion at December 31, 2008 from $10.1 billion at December 31, 2007. Loans and leases, net of unearned income, increased 5.6 percent to $9.7 billion at December 31, 2008 from $9.2 billion at December 31, 2007. Patterson remarked, "We produced solid loan growth during 2008, with the annualized rate of growth moderating to 4.1 percent for the fourth quarter. We believe our loan growth, as well as the 12.7 percent annualized growth in demand deposits during the fourth quarter, in part reflects increased market share due to the strength and stability of BancorpSouth in a period of increased consumer concern about the performance of the financial services industry." Provision for Credit Losses and Allowance for Credit Losses For the fourth quarter of 2008, the provision for credit losses was $17.8 million compared with $7.8 million for the fourth quarter of 2007 and $16.3 million for the third quarter of 2008. Annualized net charge-offs were 0.57 percent of average loans and leases for the fourth quarter of 2008 compared with 0.21 percent for the fourth quarter of 2007 and 0.45 percent for the third quarter of 2008. Non-performing loans and leases increased to $61.5 million, or 0.64 percent of net loans and leases, at December 31, 2008 from $28.5 million, or 0.31 percent of net loans and leases, at December 31, 2007 but declined from $62.5 million, or 0.65 percent of net loans and leases, at September 30, 2008. The allowance for credit losses increased to 1.37 percent of net loans and leases at December 31, 2008 compared with 1.25 percent at December 31, 2007 and 1.35 percent at September 30, 2008. "The sequential quarter increase in annualized net charge-offs and the decline in non-performing loans, both as a percentage of net loans and leases, demonstrates our commitment to addressing emerging credit issues promptly," commented Patterson. "With a provision for credit losses of $17.8 million for the fourth quarter of 2008, compared with actual net charge-offs of $13.8 million for the quarter, we remained well reserved. Our allowance for credit losses at the end of 2008 was 2.1 times the amount of non-performing loans at year end and 2.4 times the amount of annualized net charge-offs for the quarter." Noninterest Revenue For the fourth quarter of 2008, noninterest revenue declined 28.7 percent, or $15.9 million, to $39.5 million from $55.3 million for the fourth quarter of 2007. These results included the pre-tax write down of the mortgage servicing asset of $16.3 million for the fourth quarter of 2008 and $4.5 million for the fourth quarter of 2007. They also included the fourth quarter 2008 pre-tax write down of $8.6 million of other than temporary impairment of certain investment securities discussed earlier in this release. After the write down, the carrying value of these pooled trust preferred securities was $2.4 million at December 31, 2008 and represented our only investment in this type of security. These securities remain current as to interest payments but their fair value has been negatively impacted by current market conditions. Comparable quarter insurance commission revenue increased 15.9 percent to $18.8 million and mortgage lending revenue, excluding the decline in the value of the mortgage servicing asset, rose 20.2 percent to $4.1 million over the same quarter of 2007. Also included in noninterest revenue in the fourth quarter of 2008 were security gains totaling $2.4 million. Patterson continued, "Our insurance business produced its fourth consecutive quarter of double-digit revenue growth, supported by an insurance agency acquisition in the third quarter of 2007 and two agency acquisitions in the first quarter of 2008. While the sharp declines in interest rates during the fourth quarter had a significant impact on our mortgage servicing asset, we also believe that the growth in mortgage lending revenue from originations and refinancings for the fourth quarter reflects an ongoing opportunity. We note that the carrying value of the mortgage servicing asset at December 31, 2008 was $25.0 million, or 82 basis points of the unpaid principal balance of the loans being serviced, compared to 115 basis points at December 31, 2007." Noninterest Expense Noninterest expense increased 0.8 percent to $111.1 million for the fourth quarter of 2008 from $110.2 million for the fourth quarter of 2007 and decreased 4.3 percent from $116.1 million for the third quarter of 2008. The comparable quarter increase in noninterest expense is primarily attributable to the operation of the insurance agencies acquired in the first quarter of 2008, as well as the opening of new loan production offices and full-service branch bank offices during 2008. The sequential quarter decline in noninterest expense is primarily the result of an increased focus throughout the Company on expense control and reduction. Capital Management BancorpSouth's long-term, conservative focus on maintaining a sound and adequate capital position and ample liquidity provides it with a competitive advantage in the current economic cycle and enhances its opportunity for future growth. During 2008, BancorpSouth continued building upon its strong capital position, expanding its equity to asset ratio to 9.20 percent at the end of 2008 from 9.07 percent at the end of 2007. Its equity to asset ratio was 9.34 percent at the end of the third quarter of 2008. BancorpSouth's ratio of tangible equity to assets was 7.15 percent at the end of 2008 compared to 7.09 percent at the end of 2007 and 7.25 percent at the end of the third quarter of 2008. BancorpSouth remains a "well capitalized" bank holding company as defined by federal regulations, with Tier 1 risk-based capital of 10.79 percent at year end and total risk based capital of 12.04 percent, compared with required minimum levels of 6 percent and 10 percent, respectively, to meet the definition of "well capitalized." BancorpSouth did not repurchase shares of its common stock during the fourth quarter of 2008. Summary "Our confidence in the financial strength of BancorpSouth is exemplified by our decision, after careful deliberation, to forego participation in the Capital Purchase Program under TARP," said Patterson. "While we recognize that the difficult economic environment will continue to affect our financial and operating results, BancorpSouth has performed well relative to our peer group, we have a strong capital structure with ample liquidity and we continue to build on a quality loan portfolio with manageable levels of non-performing loans and net charge-offs. "During 2009, we will remain focused on credit quality, especially with regard to the early identification and resolution of emerging credit issues. In addition we will continue to focus on controlling growth, on further strengthening our capital structure and on expense management and reduction. As a result, we expect to maintain the flexibility to respond to strategic opportunities that are consistent with our long-term growth objectives. We believe we are well positioned to weather the current environment and that our financial strength will enhance our ability to grow when the economic cycle begins to improve." Conference Call BancorpSouth will conduct a conference call to discuss its fourth quarter 2008 results tomorrow, January 23, 2009, at 10:00 a.m. (Central Time). Investors may listen via the Internet by accessing BancorpSouth's website at http://www.bancorpsouth.com/. A replay of the conference call will be available at BancorpSouth's website for at least two weeks following the call. Forward-Looking Statements Certain statements contained in this news release may not be based on historical facts and are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by their reference to a future period or periods or by the use of forward-looking terminology such as "anticipate," "believe," "estimate," "expect," "may," "might," "will," "would," "could" or "intend." These forward-looking statements include, without limitation, statements relating to our credit quality, our loan growth and growth in demand deposits, our capital structure, the impact of the economic environment on our financial and operating results, the management and reduction of our expenses, our flexibility to respond to strategic opportunities, our financial strength, our ability to weather the current environment and to take advantage of opportunities for future growth and growth in mortgage lending revenue. We caution you not to place undue reliance on the forward-looking statements contained in this news release in that actual results could differ materially from those indicated in such forward-looking statements because of a variety of factors. These factors may include, but are not limited to, changes in economic conditions and government fiscal and monetary policies, fluctuations in prevailing interest rates and the ability of BancorpSouth to manage its assets and liabilities to limit exposure to changing interest rates, the ability of BancorpSouth to increase noninterest revenue and expand noninterest revenue business, the ability of BancorpSouth to maintain credit quality, changes in laws and regulations affecting financial service companies in general, the ability of BancorpSouth to compete with other financial services companies, the ability of BancorpSouth to provide and market competitive services and products, changes in BancorpSouth's operating or expansion strategy, BancorpSouth's business model, geographic concentration of BancorpSouth's assets, the ability of BancorpSouth to manage its growth and effectively serve an expanding customer and market base, the ability of BancorpSouth to achieve profitable growth and increase shareholder value, the ability of BancorpSouth to attract, train and retain qualified personnel, the ability of BancorpSouth to identify, close and effectively integrate potential acquisitions, the ability of BancorpSouth to expand geographically and enter growing markets, changes in consumer preferences, other factors generally understood to affect the financial results of financial services companies, and other factors described from time to time in BancorpSouth's filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made. BancorpSouth, Inc. is a financial holding company headquartered in Tupelo, Mississippi, with approximately $13.5 billion in assets. BancorpSouth Bank, a wholly-owned subsidiary of BancorpSouth, Inc., operates approximately 310 commercial banking, mortgage, insurance, trust and broker/dealer locations in Alabama, Arkansas, Florida, Louisiana, Mississippi, Missouri, Tennessee and Texas. BancorpSouth Bank also operates an insurance location in Illinois. BancorpSouth, Inc. Selected Financial Data Three Months Ended Twelve Months Ended December 31, December 31, 2008 2007 2008 2007 (Dollars in thousands, except per share amounts) Earnings Summary: Net interest revenue $111,321 $109,657 $440,836 $422,899 Provision for credit losses 17,822 7,771 56,176 22,696 Noninterest revenue 39,450 55,314 242,380 231,799 Noninterest expense 111,093 110,169 452,686 428,058 Income before income taxes 21,856 47,031 174,354 203,944 Income tax provision 5,060 14,803 53,943 66,001 Net income $16,796 $32,228 $120,411 $137,943 Earning per share: Basic $0.20 $0.39 $1.46 $1.69 Diluted $0.20 $0.39 $1.45 $1.69 Balance sheet data at December 31: Total assets $13,480,218 $13,189,841 Total earning assets 12,210,439 11,948,038 Loans and leases, net of unearned income 9,691,277 9,179,684 Allowance for credit losses 132,793 115,197 Total deposits 9,711,872 10,064,099 Common shareholders' equity 1,240,260 1,196,626 Book value per share 14.92 14.54 Average balance sheet data: Total assets $13,279,593 $13,080,720 $13,200,801 $12,857,135 Total earning assets 12,109,660 11,956,412 12,037,141 11,749,433 Loans and leases, net of unearned interest 9,604,142 9,105,475 9,429,963 8,784,940 Total deposits 9,598,321 10,045,400 9,803,999 10,200,098 Common shareholders' equity 1,239,498 1,162,821 1,224,280 1,121,000 Non-performing assets at December 31: Non-accrual loans and leases $28,168 $9,789 Loans and leases 90+ days past due 33,373 18,671 Other real estate owned 46,317 24,281 Total non-performing assets 107,858 52,741 Net charge-offs as a percentage of average loans (annualized) 0.57% 0.21% 0.40% 0.14% Performance ratios (annualized): Return on average assets 0.50% 0.98% 0.91% 1.07% Return on common equity 5.39% 11.00% 9.84% 12.31% Net interest margin 3.74% 3.72% 3.75% 3.68% Average shares outstanding - basic 83,096,799 82,230,448 82,589,400 81,505,510 Average shares outstanding - diluted 83,239,216 82,482,626 82,793,663 81,844,343 BancorpSouth, Inc. Consolidated Balance Sheet (Unaudited) December 31, % 2008 2007 Change (Dollars in thousands) Assets Cash and due from banks $291,055 $322,926 (9.87%) Interest bearing deposits with other banks 13,542 12,710 6.55% Held-to-maturity securities, at amortized cost 1,333,521 1,625,916 (17.98%) Available-for-sale securities, at fair value 982,859 1,001,194 (1.83%) Loans and leases 9,740,867 9,227,495 5.56% Less: Unearned income 49,590 47,811 3.72% Allowance for credit losses 132,793 115,197 15.27% Net loans and leases 9,558,484 9,064,487 5.45% Loans held for sale 189,242 128,532 47.23% Premises and equipment, net 351,204 317,379 10.66% Accrued interest receivable 79,183 96,027 (17.54%) Goodwill 268,966 254,889 5.52% Other assets 412,162 365,781 12.68% Total Assets $13,480,218 $13,189,841 2.20% Liabilities Deposits: Demand: Noninterest bearing $1,735,130 $1,670,198 3.89% Interest bearing 3,904,307 3,276,275 19.17% Savings 678,326 698,449 (2.88%) Other time 3,394,109 4,419,177 (23.20%) Total deposits 9,711,872 10,064,099 (3.50%) Federal funds purchased and securities sold under agreement to repurchase 1,205,366 809,898 48.83% Short-term Federal Home Loan Bank borrowings and other short-term borrowing 691,510 706,586 (2.13%) Accrued interest payable 20,755 37,746 (45.01%) Junior subordinated debt securities 160,312 160,312 0.00% Long-term Federal Home Loan Bank borrowings 286,312 88,977 221.78% Other liabilities 163,831 125,597 30.44% Total Liabilities 12,239,958 11,993,215 2.06% Shareholders' Equity Common stock 207,763 205,748 0.98% Capital surplus 215,255 198,620 8.38% Accumulated other comprehensive income (loss) (26,896) (7,214) 272.83% Retained earnings 844,138 799,472 5.59% Total Shareholders' Equity 1,240,260 1,196,626 3.65% Total Liabilities & Shareholders' Equity $13,480,218 $13,189,841 2.20% BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Quarter Ended Dec-08 Sep-08 Jun-08 Mar-08 Dec-07 INTEREST REVENUE: Loans and leases $139,099 $144,393 $147,289 $159,184 $171,068 Deposits with other banks 111 172 193 208 274 Federal funds sold and securities purchased under agreement to resell 3 218 - 67 311 Held-to-maturity securities: Taxable 13,625 14,063 15,044 15,947 16,890 Tax-exempt 2,053 1,959 2,025 2,075 2,120 Available-for-sale securities: Taxable 8,693 9,025 8,531 9,564 10,227 Tax-exempt 867 874 1,260 1,204 941 Loans held for sale 2,117 1,920 1,420 2,210 1,751 Total interest revenue 166,568 172,624 175,762 190,459 203,582 INTEREST EXPENSE: Interest bearing demand 15,924 14,214 12,938 17,257 19,765 Savings 1,080 1,366 1,291 1,543 1,934 Other time 28,293 33,660 39,778 46,860 52,551 Federal funds purchased and securities sold under agreement to repurchase 2,175 4,308 3,321 5,195 8,259 FHLB Borrowings 4,537 6,277 5,359 6,285 8,107 Other 3,238 3,197 3,232 3,249 3,309 Total interest expense 55,247 63,022 65,919 80,389 93,925 Net interest revenue 111,321 109,602 109,843 110,070 109,657 Provision for credit losses 17,822 16,306 11,237 10,811 7,771 Net interest revenue, after provision for credit losses 93,499 93,296 98,606 99,259 101,886 NONINTEREST REVENUE: Mortgage lending (12,174) 3,270 9,507 1,543 (1,149) Credit card, debit card and merchant fees 8,409 8,512 8,846 7,976 7,904 Service charges 16,915 17,687 17,093 15,839 18,125 Trust income 2,328 2,507 2,261 2,234 2,996 Security gains (losses), net (6,226) 100 199 78 97 Insurance commissions 18,752 21,779 21,462 24,668 16,181 Other 11,446 9,578 13,898 13,893 11,160 Total noninterest revenue 39,450 63,433 73,266 66,231 55,314 NONINTEREST EXPENSES: Salaries and employee benefits 64,395 68,865 68,121 70,175 64,594 Occupancy, net of rental income 10,307 10,340 9,716 9,483 8,967 Equipment 6,319 6,214 6,245 6,433 6,078 Other 30,072 30,640 27,982 27,379 30,530 Total noninterest expenses 111,093 116,059 112,064 113,470 110,169 Income before income taxes 21,856 40,670 59,808 52,020 47,031 Income tax expense 5,060 12,325 19,683 16,875 14,803 Net income $16,796 $28,345 $40,125 $35,145 $32,228 Net income per share: Basic $0.20 $0.34 $0.49 $0.43 $0.39 Diluted $0.20 $0.34 $0.49 $0.43 $0.39 BancorpSouth, Inc. Consolidated Condensed Statements of Income (Dollars in thousands, except per share data) (Unaudited) Year To Date Dec-08 Dec-07 INTEREST REVENUE: Loans and leases $589,965 $668,813 Deposits with other banks 684 1,144 Federal funds sold and securities purchased under agreement to resell 288 3,687 Held-to-maturity securities: Taxable 58,679 68,142 Tax-exempt 8,112 8,256 Available-for-sale securities: Taxable 35,813 41,212 Tax-exempt 4,205 4,026 Loans held for sale 7,667 5,962 Total interest revenue 705,413 801,242 INTEREST EXPENSE: Interest bearing demand 60,333 83,833 Savings 5,280 9,301 Other time 148,591 215,723 Federal funds purchased and securities sold under agreement to repurchase 14,999 34,517 FHLB Borrowings 22,458 21,871 Other 12,916 13,098 Total interest expense 264,577 378,343 Net interest revenue 440,836 422,899 Provision for credit losses 56,176 22,696 Net interest revenue, after provision for credit losses 384,660 400,203 NONINTEREST REVENUE: Mortgage lending 2,146 6,214 Credit card, debit card and merchant fees 33,743 29,836 Service charges 67,534 68,479 Trust income 9,330 10,154 Security gains (losses), net (5,849) 121 Insurance commissions 86,661 71,182 Other 48,815 45,813 Total noninterest revenue 242,380 231,799 NONINTEREST EXPENSES: Salaries and employee benefits 271,556 255,342 Occupancy, net of rental income 39,846 35,098 Equipment 25,211 24,214 Other 116,073 113,404 Total noninterest expenses 452,686 428,058 Income before income taxes 174,354 203,944 Income tax expense 53,943 66,001 Net income $120,411 $137,943 Net income per share: Basic $1.46 $1.69 Diluted $1.45 $1.69 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2008 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,773,683 $142,039 5.78% Held-to-maturity securities: Taxable 1,193,555 13,734 4.58% Tax-exempt 180,695 3,159 6.96% Available-for-sale securities: Taxable 868,913 8,693 3.98% Tax-exempt 73,476 1,335 7.23% Short-term investments 19,338 114 2.34% Total interest earning assets and revenue 12,109,660 169,074 5.55% Other assets 1,304,386 Less: allowance for credit losses (134,453) Total $13,279,593 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,811,782 $15,924 1.66% Savings 684,068 1,080 0.63% Other time 3,400,071 28,293 3.31% Short-term borrowings 1,828,010 3,951 0.86% Junior subordinated debt 160,312 3,161 7.84% Long-term debt 287,990 2,838 3.92% Total interest bearing liabilities and expense 10,172,233 55,247 2.16% Demand deposits - noninterest bearing 1,702,400 Other liabilities 165,462 Total liabilities 12,040,095 Shareholders' equity 1,239,498 Total $13,279,593 Net interest revenue $113,827 Net interest margin 3.74% Net interest rate spread 3.39% Interest bearing liabilities to interest earning assets 84.00% Net interest tax equivalent adjustment $2,506 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Quarter Ended December 31, 2007 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,216,034 $173,685 7.48% Held-to-maturity securities: Taxable 1,498,608 16,890 4.47% Tax-exempt 192,464 3,261 6.72% Available-for-sale securities: Taxable 923,725 10,227 4.39% Tax-exempt 79,422 1,448 7.23% Short-term investments 46,159 585 5.03% Total interest earning assets and revenue 11,956,412 206,096 6.84% Other assets 1,241,631 Less: allowance for credit losses (117,323) Total $13,080,720 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,214,493 $19,765 2.44% Savings 700,583 1,934 1.09% Other time 4,512,151 52,550 4.62% Short-term borrowings 1,382,163 14,320 4.11% Junior subordinated debt 161,556 3,302 8.11% Long-term debt 141,576 2,054 5.75% Total interest bearing liabilities and expense 10,112,522 93,925 3.68% Demand deposits - noninterest bearing 1,618,173 Other liabilities 187,204 Total liabilities 11,917,899 Shareholders' equity 1,162,821 Total $13,080,720 Net interest revenue $112,171 Net interest margin 3.72% Net interest rate spread 3.15% Interest bearing liabilities to interest earning assets 84.58% Net interest tax equivalent adjustment $2,514 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date December 31, 2008 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $9,586,821 $600,925 6.27% Held-to-maturity securities: Taxable 1,282,512 59,119 4.61% Tax-exempt 184,243 12,480 6.77% Available-for-sale securities: Taxable 859,932 35,813 4.16% Tax-exempt 90,703 6,470 7.13% Short-term investments 32,930 972 2.95% Total interest earning assets and revenue 12,037,141 715,779 5.95% Other assets 1,291,675 Less: allowance for credit losses (128,015) Total $13,200,801 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,552,690 $60,333 1.70% Savings 712,330 5,280 0.74% Other time 3,874,192 148,591 3.84% Short-term borrowings 1,565,381 26,858 1.72% Junior subordinated debt 160,312 12,469 7.78% Long-term debt 278,845 11,046 3.96% Total interest bearing liabilities and expense 10,143,750 264,577 2.61% Demand deposits - noninterest bearing 1,664,787 Other liabilities 167,984 Total liabilities 11,976,521 Shareholders' equity 1,224,280 Total $13,200,801 Net interest revenue $451,202 Net interest margin 3.75% Net interest rate spread 3.34% Interest bearing liabilities to interest earning assets 84.27% Net interest tax equivalent adjustment $10,366 BancorpSouth, Inc. Average Balances, Interest Income and Expense, and Average Yields and Rates (Dollars in thousands) (Unaudited) Year to Date December 31, 2007 Average Yield/ (Taxable equivalent basis) Balance Interest Rate ASSETS Loans, loans held for sale, and leases net of unearned income $8,880,253 $678,155 7.64% Held-to-maturity securities: Taxable 1,530,247 68,142 4.45% Tax-exempt 189,234 12,701 6.71% Available-for-sale securities: Taxable 977,459 41,212 4.22% Tax-exempt 84,292 6,194 7.35% Short-term investments 87,948 4,831 5.49% Total interest earning assets and revenue 11,749,433 811,235 6.90% Other assets 1,217,135 Less: allowance for credit losses (109,433) Total $12,857,135 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits: Demand - interest bearing $3,191,433 $83,833 2.63% Savings 718,080 9,301 1.30% Other time 4,636,436 215,723 4.65% Short-term borrowings 1,057,057 48,098 4.55% Junior subordinated debt 159,939 13,067 8.17% Long-term debt 144,006 8,321 5.77% Total interest bearing liabilities and expense 9,906,951 378,343 3.81% Demand deposits - noninterest bearing 1,654,149 Other liabilities 175,035 Total liabilities 11,736,135 Shareholders' equity 1,121,000 Total $12,857,135 Net interest revenue $432,892 Net interest margin 3.68% Net interest rate spread 3.09% Interest bearing liabilities to interest earning assets 84.32% Net interest tax equivalent adjustment $9,993 DATASOURCE: BancorpSouth, Inc. CONTACT: L. Nash Allen, Jr., Treasurer and Chief Financial Officer, +1-662-680-2330, or Gary C. Bonds, Executive Vice President and Controller, +1-662-680-2332 Web site: http://www.bancorpsouth.com/

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